Obamacare penalty set to double in 2016

The penalty for not having health insurance will rise to $695 or 2.5 percent of taxable income in 2016, more than double the minimum fine of $325 in 2015.

With the enrollment period set to begin on November 1, the remaining 9 percent of Americans without health insurance (an all-time low) will have a decision to make as federal subsidies can cover up to 70 percent of monthly premium costs.

Subsidies are dependent on income, and individuals who sign up for employer-sponsored plans are not eligible to receive assistance. In 2016, business owners with 50 or more employees will be required to offer health insurance to their workers as mandated by the Affordable Care Act.

In 2015, only businesses which employed 100 or more people were subject to the mandate.

Despite the progression of the law, and the increasingly steep costs of not having insurance, many low-income employees are continuing to go without simply because premiums are still too high.

According to insurance broker Michael Bodack, “Based on what what we’ve seen in the marketplace, we’re advising some of our clients to expect single-digit take rates. One or two percent isn’t unusual.”

Billy Sewell, for example, who owns 26 Golden Corral franchises at which 600 employees are eligible to sign-up for a company-sponsored plan, has only had two workers take advantage of the offer despite a monthly premium of $140 per month.

The low participation rate is not surprising for those who study the issue, as a 2013 report by ADP showed that most employees will not buy health insurance if they make less than $45,000 per year. The study found that only 37 percent of those who make between $5,000 and $20,000 will sign-up for an employer-sponsored plan.

Despite the participation rate among low-income workers, the total uninsured rate has been cut by 8.5 percent since 2010. Most of the sign-ups however have resulted from an expanded Medicaid program, or from state exchanges that offer individuals federal assistance.

As for the effectiveness of the “Obamacare tax”, 7.5 million households paid $1.5 billion in fines, while 12 million uninsured households claimed a financial hardship exemption in the 2014 tax year.

The Obama Administration expects 3.4 million new people will enroll in an insurance plan through healthcare.gov in 2016.